Flagging Britain's interests

Photographer: Ben Pruchnie

Leaving Europe Would Be a Terrible Investment

David Harding is founder and chief executive officer of Winton Capital Management, and co-treasurer of the Britain Stronger in Europe campaign.
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The countdown to Britain's EU referendum has started. Prime Minister David Cameron has secured some important concessions from his European counterparts. This is all very welcome, but deal or no deal I would have argued for Britain to stay in Europe.

I became involved in the Britain Stronger in Europe campaign -- comprised of organizations and individuals that favour Britain remaining within the European Union -- not because I am a zealous pro-European, but rather because I am a pragmatist whose decades of working in Europe (as founder and CEO of a major investment management company), have led me to believe that we are better off remaining for five reasons.

QuickTake Will Britain Leave Europe?

First, it can be hard to appreciate the status quo, but Britain has it pretty good already. Consider the atmosphere in which British businesses operate: within the European Union, a bloc of 500 million people; friendly with America; tied by history and loyalty to the Commonwealth. It's not scaremongering to point out that, in economic terms, there is a certain safety in numbers. It would be folly to disregard the enormous practical benefit of being part of an economic bloc this size.

Second, when it comes to our security and to scientific progress, transnational projects are increasingly important. We would never dream of pulling out of NATO, on the grounds that we are better able to defend ourselves if allied with others. This principle should be applied elsewhere. Take, for example, space technology. It has always been disappointing that Britain lacks its own space programme, but there is some consolation in the fact that we have a hand in the European Space Agency. This may seem peripheral to the referendum debate. But a new space race is underway, and this has implications for our security. If Britain is far-sighted it will consider how to defend itself in space as much as on the sea and on the ground -- and for that we need the solidarity of the EU as much as we need the solidarity of NATO.

Third, many of the complaints against the EU are overblown. We hear much about over-regulation, loss of control and the "dead hand" of European bureaucracy on British businesses. The perception is much worse than the reality. Most businesses are not “suffocated” by red tape from Brussels. To give an example from my own industry, hedge funds were terrified of the impact of the EU’s Alternative Investment Fund Managers Directive; in fact the Aifmd did not prove the regulatory burden they feared.

Fourth, we should not overlook Britain’s cultural similarity to the rest of Europe. The needling of the French or Germans can blind us to just how alike we are. Much as I love the United States, there are wide cultural differences with the U.K. -- the millions who flock to mega-churches housed in stadiums, the shopping-mall towns, the religiosity of public life, the national extroversion, the guns. When I travel in Europe the sensation is the opposite. We are linked by a certain cautious sensibility, cultural leanings from classical music to European football, respected and reserved monarchies. We have our language in common with the U.S. and our culture in common with Europe.

Finally, given our similarities, our history and our geographical proximity, for Britain to leave the EU would be seen as profoundly unfriendly and arrogant. This is not unimportant. The perception among the people of Europe matters greatly to our future prosperity. The various out campaigns profess to love Europe the continent and not Europe the institution -- and they argue we can have the friendship and trading links without being tied to the EU contractually. But this underestimates the importance of goodwill; and the severe hit to that goodwill if Britain were to leave Europe.

For decades I have done business with senior figures in French and German businesses. They would regard Britain leaving as a mixture of foolishness and arrogance. It would be perceived as an outright rejection – and quite baffling, considering that now Britain has the most flexible and special arrangement of any EU member.

We have successfully opted out of the euro, the border-free Schengen area, and now – with the Prime Minister’s reforms – from “ever closer union.” Given just how much we have asked for as a member, what is it that makes "leave" campaigners so sure we would be likely to get an even better deal outside?

All this does not suggest that it would be impossible for Britain to make it on its own. Of course we could survive. But would we thrive? All other alternatives outside the EU leave countries with a worse deal than the U.K. has now.

Norway and Switzerland accept most EU rules, yet they have no say over them – and still pay into the EU budget. That’s the deal which gives you access to the world’s largest single market. If you forgo that access, you end up like Canada, who have a free trade deal, but which doesn’t include services. London is the financial capital of the world and its banks can only trade across the EU with access to the single financial passport. That only comes with EU membership.

Outside the EU we would be weaker. We would risk close business friendships in a world where we increasingly need them. We would peel away from a major economic bloc just as strength in numbers becomes more important. For these reasons, it would be better for the vast majority of people in Britain to stay in.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
David Harding at davidharding@bloomberg.net

To contact the editor responsible for this story:
Therese Raphael at traphael4@bloomberg.net